The crypto markets woke up Tuesday with the kind of energy that's been missing for a while. Bitcoin (BTC) pushed past $96,000 for the first time since mid-November, and pretty much everything else followed suit. The catalyst? Washington is actually doing something productive for once.

Here's how the major cryptocurrencies looked at 8:20 p.m. ET:

Why Everyone's Suddenly Optimistic

The Senate Banking Committee dropped a draft of their cryptocurrency market structure bill, and the big news is how they're treating altcoins. The bill defines them similarly to Bitcoin and Ethereum, which matters a lot if you're trying to figure out whether your favorite digital asset is going to be regulated into oblivion. The Committee plans to mark up the bill on Thursday, which means we're moving from theoretical policy discussions to actual legislative action.

Bitcoin's trading volume jumped 45% over the last 24 hours, which tells you how quickly money rushed in once traders sensed regulatory clarity on the horizon. The leading cryptocurrency is now up 9.29% in 2026, making back some of the ground lost during the recent pullback.

Ethereum (ETH) hit a two-month high of $3,350, while XRP and Dogecoin also posted sharp gains. The enthusiasm spilled over into crypto-related stocks, with Strategy Inc. (MSTR) closing up 6.63% and Coinbase Global Inc. (COIN) gaining 4%.

Bears Got Crushed

When markets move this fast, someone's on the wrong side of the trade. According to Coinglass data, nearly $680 million in positions got liquidated over the last 24 hours. The painful part for the shorts? About $592 million of those liquidations came from bearish bets that Bitcoin would keep falling.

Bitcoin's open interest surged 6.65% in 24 hours, with more than half of derivatives traders now placing long bets on the apex cryptocurrency. The Crypto Fear & Greed Index shifted from "Fear" to "Neutral," which might sound boring but actually signals that panic has left the building.

Some smaller cryptocurrencies posted even more dramatic gains:

The global cryptocurrency market capitalization jumped to $3.25 trillion, up 4.67% over 24 hours.

Meanwhile, Stocks Took a Breather

While crypto partied, traditional markets pulled back from record highs. The Dow Jones Industrial Average dropped 398.21 points, or 0.8%, to close at 49,191.99. The S&P 500 dipped 0.19% to 6,963.74, and the Nasdaq Composite slipped 0.1% to finish at 23,709.8.

December's Consumer Price Index came in exactly as expected, rising 2.7% year over year. Monthly consumer prices increased 0.3%, also matching forecasts. So inflation wasn't the problem.

Oil prices did climb, though, with U.S. West Texas Intermediate surging past $61 a barrel after President Donald Trump told Iranian protesters that "help is on its way." That kind of geopolitical tension usually gets the energy markets' attention.

Defense stocks had a rough day despite Trump announcing plans to increase the 2027 military budget from $1 trillion to $1.5 trillion. Lockheed Martin Corp. (LMT) fell 4.34% and Kratos Defense & Security Solutions, Inc. (KTOS) dropped 13.78%. Sometimes the market trades on details we don't see in the headlines.

What The Charts Are Saying

Michaël van de Poppe, a widely followed cryptocurrency analyst and trader, pointed out that Bitcoin broke above its crucial 21-day moving average and successfully tested that level as support. That's technical trader speak for "the trend might be changing."

"It's quite clear that this is going to run to $100,000 in the coming week and that dips are for buying," van de Poppe projected. "The bull market hasn't died, it's about to start."

Popular analyst Ali Martinez offered his own price target, suggesting that $105,921 "comes into play" if Bitcoin crosses $94,555. As of this writing, Bitcoin has cleared that threshold, so now we get to see if Martinez's prediction plays out or if he's just another voice in the perpetual crypto hype machine.

Either way, the combination of regulatory progress and technical breakouts has clearly shifted sentiment. Whether that's enough to push Bitcoin to six figures remains the most interesting question in markets right now.